Millennials Own Just 3% of the National Wealth.

[Singuy]

The article is written in English. And this is exactly the problem with understanding Economics.

In the 50's and 60's, there was a huge influx of automation, but wages continued to grow. Then, 30 years later, automation was blamed for stagnating wages because growth of automation in the 80's and 90's. For a variety of reasons: Skills and education were believed to be deficient in ways that hurt wages. Not only did the opposite happen with wages in the 90's compared to the first growth of automation, but the killer is data from the last 20 years. Automation hasn't really grown, yet wages continue to languish even despite growth.. Removing the force of automation growth should have seen increases in wages. So it would really would appear that the two aren't linked as believed.

Thats my take on it. If Steve reads it too I’d be interested to hear his thoughts.

Okay I thought that was with the article is going for when I looked at the table at the bottom.

The problem is you cannot correlate "growth of automation" had "growth of wages" and stagnant automation growth = stagnant of wages so therefore more automation should increase wages.

There's a gigantic lag with automation. As automation grows, more employees are needed to install these systems hence wages are going up. But once the machines are installed, kinks worked out, and can finally see production beyond typical group of workers, then that's when we see a growth in productivity, and stagnant in wages(I mean this was the reason why they spend a decade installing machines to begin with). Automation growth is now stagnant because these companies installed what they needed to supply the demand decades ago and now reaping the rewards with increase productivity while decreasing number of workers. You shouldn't see Ford continue to buy robots like they did 30-40 years ago because the demand for their cars is not infinite. So that's why I have concluded (if that was the meaning of the article) the correlation they used does not equal causation.

[disneysteve]

There's a gigantic lag with automation. As automation grows, more employees are needed to install these systems hence wages are going up. But once the machines are installed, kinks worked out, and can finally see production beyond typical group of workers, then that's when we see a growth in productivity, and stagnant in wages(I mean this was the reason why they spend a decade installing machines to begin with). Automation growth is now stagnant because these companies installed what they needed to supply the demand and fully saturated the market. You shouldn't see Ford continue to buy robots like they did 20 years ago because the demand for their cars is not infinite. So that's why I have concluded (if that was the meaning of the article) the correlation they used does not equal causation.

So a company spends a bunch of money upfront to increase automation. Once that's up and running, they need fewer workers. Makes sense.

What happens to the workers that remain, though? The company is now operating with lower overhead and the same or higher productivity meaning their profits are up. Shouldn't the workers that are still there see some benefit from that? Why would their wages remain flat if the company is spending less and making more?

If I'm missing something in my line of thinking here, please correct me. I'm no economics pro.

[Singuy]

So a company spends a bunch of money upfront to increase automation. Once that's up and running, they need fewer workers. Makes sense.

What happens to the workers that remain, though? The company is now operating with lower overhead and the same or higher productivity meaning their profits are up. Shouldn't the workers that are still there see some benefit from that? Why would their wages remain flat if the company is spending less and making more?

If I'm missing something in my line of thinking here, please correct me. I'm no economics pro.

Everything is supply and demand. When automation decreased number workers, now there are more workers without a job. The only time when you see wages stagnant is NOT because companies refuse to pay more, it's because there's fierce competition and people are willing to take a lower pay just so they can eat. When there's a labor shortage, companies have no problem paying more.

For example, automation killed the pharmacy jobs with central fill and technology. Our wages have been stagnant for 12 years now(I was offered 110k when I got out of school, our newest hired was offered 100k 12 years later). There was a time when the baby boomers retiring caused a HUGE pharmacist shortage and our wages were going up 10+% yearly. Now thanks to automation and all the schools ramping at pumping out more pharmacist, the amount of jobs became scarce and we have seen pay as low as 85k/year in my area which was unheard of 12 years ago. And you can make a case that we pharmacist are "producing" more than ever before thanks to automation in the system. I mean there are more people than ever on drugs today while using like 2/3 the number of pharmacist to do the job.

[disneysteve]

Everything is supply and demand. When automation decreased number workers, now there are more workers without a job. The only time when you see wages stagnant is NOT because companies refuse to pay more, it's because there's fierce competition and people are willing to take a lower pay just so they can eat. When there's a labor shortage, companies have no problem paying more.

For example, automation killed the pharmacy jobs with central fill and technology. Our wages have been stagnant for 12 years now(I was offered 110k when I got out of school, our newest hired was offered 100k 12 years later). There was a time when the baby boomers retiring caused a HUGE pharmacist shortage and our wages were going up 10+% yearly. Now thanks to automation and all the schools ramping at pumping out more pharmacist, the amount of jobs became scarce and we have seen pay as low as 85k/year in my area which was unheard of 12 years ago.

Okay, so all of that said, which I agree with and makes perfect sense, it shouldn't be that difficult to understand why younger folks are struggling to get ahead. If a good professional job that paid 110K 12 years ago is now only paying 100K, a new pharmacist is going to have a much harder time getting ahead than you did. The cost of everything else certainly hasn't stayed the same. Housing is a lot more expensive. Pharmacy school certainly isn't the same price.

Your story doesn't support the theory that young people are struggling because they're lazy and unmotivated to do better.

[Singuy]

Okay, so all of that said, which I agree with and makes perfect sense, it shouldn't be that difficult to understand why younger folks are struggling to get ahead. If a good professional job that paid 110K 12 years ago is now only paying 100K, a new pharmacist is going to have a much harder time getting ahead than you did. The cost of everything else certainly hasn't stayed the same. Housing is a lot more expensive. Pharmacy school certainly isn't the same price.

Your story doesn't support the theory that young people are struggling because they're lazy and unmotivated to do better.

The thing is this. I agree that it's much harder today than before but ONLY if you don't change with the times. Those who are going to pharmacist school today, paying tuition 3x of what I paid, and then getting a job that pays 80% of what I got paid, is a good example of people not changing with the time.

It's not about laziness. I never said anyone is lazy. I said they are not being resourceful with the power of the information age. You have to utilize these powerful tools to get ahead vs "oh I heard Tom was a pharmacist and is now in the middle class, I'll be a pharmacist too" then realized you are screwed for life without sitting down and actually do some research on ROI. This LINE OF THINKING is LAZY and will get you in trouble real fast.

My preach is this. I would love every single American before they do life altering decisions to sit down and use the information age to calculate their ROI to the best of their abilities and plan further ahead than tomorrow. Do the bare min first before blaming it on the system. Yes ,there's problem with the system. There's problem with any system, not any is perfect for everyone. But I feel strongly that Americans haven't exhausted all their resources before hitting that American Dream brick wall due to some kind of system barrier, not even close.

[disneysteve]

The thing is this. I agree that it's much harder today than before but ONLY if you don't change with the times. Those who are going to pharmacist school today, paying tuition 3x of what I paid, and then getting a job that pays 80% of what I got paid, is a good example of people not changing with the time.

It's not about laziness. I never said anyone is lazy. I said they are not being resourceful with the power of the information age. You have to utilize these powerful tools to get ahead vs "oh I heard Tom was a pharmacist and is now in the middle class, I'll be a pharmacist too" then realized you are screwed for life without sitting down and actually do some research on ROI. This LINE OF THINKING is LAZY and will get you in trouble real fast.

My preach is this. I would love every single American before they do life altering decisions to sit down and use the information age to calculate their ROI to the best of their abilities and plan further ahead than tomorrow. Do the bare min first before blaming it on the system. Yes ,there's problem with the system. There's problem with any system, not any is perfect for everyone. But I feel strongly that Americans haven't exhausted all their resources before hitting that American Dream brick wall due to some kind of system barrier, not even close.

Okay, I think here you make some valid points that haven't really come through in some earlier posts. But I also think this really highlights some of the issues.

What's the future of pharmacists, just to use that as an example? In the past decade especially, the number of retail pharmacies has skyrocketed, at least here on the east coast. They almost literally build one on every corner. Sometimes there is a CVS and a Walgreens directly across the street from each other. Right now, they are building a new CVS near us that is maybe 2 miles from the CVS down the same road that was just built maybe 3 or 4 years ago, and that one is less than a mile from another CVS on the cross street.

So the demand for pharmacists must be higher than ever because every one of those locations needs at least a couple of them. Who will fill those jobs if folks start doing as you suggest and realizing the field isn't as lucrative as it once was and stop jumping on that career path? Or will that then create a shortage and result in higher incomes, which will then drive more people to go into the field. Seems like that is a vicious cycle. I actually recall the same thing playing out in the nursing field years ago. There was a big shortage, so more students went to nursing school, but by the time they graduated, the shortage had dried up and many of them had trouble finding decent jobs. Based on the information they had available at the time they had to make the decision, all indications were that nursing was a great field to enter.

[Singuy]

Okay, I think here you make some valid points that haven't really come through in some earlier posts. But I also think this really highlights some of the issues.

What's the future of pharmacists, just to use that as an example? In the past decade especially, the number of retail pharmacies has skyrocketed, at least here on the east coast. They almost literally build one on every corner. Sometimes there is a CVS and a Walgreens directly across the street from each other. Right now, they are building a new CVS near us that is maybe 2 miles from the CVS down the same road that was just built maybe 3 or 4 years ago, and that one is less than a mile from another CVS on the cross street.

So the demand for pharmacists must be higher than ever because every one of those locations needs at least a couple of them. Who will fill those jobs if folks start doing as you suggest and realizing the field isn't as lucrative as it once was and stop jumping on that career path? Or will that then create a shortage and result in higher incomes, which will then drive more people to go into the field. Seems like that is a vicious cycle. I actually recall the same thing playing out in the nursing field years ago. There was a big shortage, so more students went to nursing school, but by the time they graduated, the shortage had dried up and many of them had trouble finding decent jobs. Based on the information they had available at the time they had to make the decision, all indications were that nursing was a great field to enter.

They have reduced pharmacy hours dramatically. They used to be mostly 24/h pharmacies, now you are lucky if you find 2 in a city. The financial crisis and the rise of mail order pharmacies(that are tied to big insurance companies) reduced jobs significantly.

Economic system deals with boom and bust all the time. When one sector is hot, people will flock to it until it's no longer hot. People need to do a little more than just go where the trend is(for all asset classes including education). The most successful are those who can predict the future with some certainty through research than becoming a statistic of failure. I have advocated that AI/automation will kill our pharmacy jobs 7+ years ago and literally told people to save up. Not a lot of believers back then. Now they are thinking there's some truth to that when these new kids can't find any jobs.

[Fishindude77]

Heck you can make $85k as a welder, pipe fitter, heavy equipment operator, etc. with no college expenses required, you start your career 4+ years earlier and you earn a good living as you learn the craft.

Prime example to support the thought that Americans should use the information age to calculate their ROI to the best of their abilities and plan further ahead than tomorrow.

[Singuy]

My biggest problem with this system blaming is that it provide Americans who are already weak in their ability to blame themselves for any wrong doing a scapegoat. That's why I feel people should do the bare min first like a little bit of planning for the future before start pointing their fingers at anything. Finger pointing is super easy and counterintuitive to one's success.

Ever worked with people who are super defensive and comes up with a million excuses+ 1? Out of a sea of 100 employees, it's hard to find more than 10 who are accountable and doesn't make excuses. This is the problem by finding explanations that are out of their control to explain their lack of success. It feeds exactly to what they crave for so they don't have to blame themselves. Politicians understand this and plays the voting public like a fiddle.

[disneysteve]

Ultimately, though, there's no denying that wages have not kept pace with costs.

When I graduated high school in 1982, the median household income was $23,400. Today, 39 years later, it's $79,900, about 3.4 times more.

Average new home price in 1980 was $76,400. Today it's $408,800. That's 5.35 times more.

Average new car price in 1980 was $7,000. Today it's $40,000. That's 5.7 times more.

Wages haven't kept up with costs. You're making 3 times more but everything costs 5 times more. Younger people are at a disadvantage from the start compared to older people as far as the ratio of earnings to expenses. Buying that first home is a lot more difficult than it was for me and my peers, for example.

[Singuy]

Ultimately, though, there's no denying that wages have not kept pace with costs.

When I graduated high school in 1982, the median household income was $23,400. Today, 39 years later, it's $79,900, about 3.4 times more.

Average new home price in 1980 was $76,400. Today it's $408,800. That's 5.35 times more.

Average new car price in 1980 was $7,000. Today it's $40,000. That's 5.7 times more.

Wages haven't kept up with costs. You're making 3 times more but everything costs 5 times more. Younger people are at a disadvantage from the start compared to older people as far as the ratio of earnings to expenses. Buying that first home is a lot more difficult than it was for me and my peers, for example.

Most likely because people used credit to substitute wages, especially in a low interest rate environments. Goods are not priced at a certain level for the sake of being expensive. There's demand for them and companies are still selling as much as they can produce.

Apparently you can buy a ton goods using money you haven't earned. So the ease of access to credit makes good.."out of reach" if you were just using wages as the sole place of money supply. Wages will never keep up with the price of good when people borrow at 3-5x earnings to buy that American dream. This is why interest rates are there to encourage less spending by limiting the ability to borrow.

[Singuy]

Just to drive home that interest rate is the true culprit for all of this price increase and the notion that wages should keep up with prices misses the point.

1982, borrowing 76k @ 16% mortgage interest rate is $1084/month
In 2021, borrowing 408k@3% mortgage interest rate is 1720/month



Wages according to you is 3.4x more today than in 1982. As you can see, monthly payment did not 3.4x at all, not even close. I'm surprise all the people didn't protest the streets with pitch forks in 1982 as the monthly payment is 44% of the average PRETAX pay vs only 26% of today's average PRETAX pay. And we are not even talking about how in a low interest environment, you are building more equity per payment vs a 16% mortgage interest rate, hence building more wealth.

Millennials have access to a house more today than in 1982. There's an economic lag to interest rate movements and house prices which creates many good buying opportunities in which rates are lower and prices are lower. However eventually they all work toward some sort of equilibrium from causes and affect.
The market wants to push an ease of access to goods as they want record profits and record demand.

Historical interest rates

30-Year Fixed-Rate Mortgages Since 1971 - Freddie Mac

[LivingAlmostLarge]

Just to drive home that interest rate is the true culprit for all of this price increase and the notion that wages should keep up with prices misses the point.

1982, borrowing 76k @ 16% mortgage interest rate is $1084/month
In 2021, borrowing 408k@3% mortgage interest rate is 1720/month



Wages according to you is 3.4x more today than in 1982. As you can see, monthly payment did not 3.4x at all, not even close. I'm surprise all the people didn't protest the streets with pitch forks in 1982 as the monthly payment is 44% of the average PRETAX pay vs only 26% of today's average PRETAX pay. And we are not even talking about how in a low interest environment, you are building more equity per payment vs a 16% mortgage interest rate, hence building more wealth.

Millennials have access to a house more today than in 1982. There's an economic lag to interest rate movements and house prices which creates many good buying opportunities in which rates are lower and prices are lower. However eventually they all work toward some sort of equilibrium from causes and affect.
The market wants to push an ease of access to goods as they want record profits and record demand.

Historical interest rates

30-Year Fixed-Rate Mortgages Since 1971 - Freddie Mac

Maybe but their purchasing power decreased A LOT. Look at your example of 12 years ago in 2009 paid $110k, and $100k in 2021. Um that is a serious paycut. According to a savings calculator that $110k should be $136k in today's dollars. Instead a new pharmacist is making $100k so $36k paycut which is 33% paycut. This is on top of the rising home prices.

http://www.fedprimerate.com/new_home...ce_history.htm national average

Sept 2009 Median $216k , Average $290k interest rate is 5.06% Payments are $1167 median , $1567 average
July 2021 $390k , Average $446k interest rate is 2.87% $1617 median , $1867 average

So it's gone up. 38.5% for median home payments have gone up , 19.1% it's gone up for the average

But instead you have a $36k inflation paycut or $10k real paycut.

So how are people to even be the same?

Fishing I agree that you should be a welder for $85k. But is it not publicized enough? Is it that high because people don't want to do it? Why not?

[Singuy]

Maybe but their purchasing power decreased A LOT. Look at your example of 12 years ago in 2009 paid $110k, and $100k in 2021. Um that is a serious paycut. According to a savings calculator that $110k should be $136k in today's dollars. Instead a new pharmacist is making $100k so $36k paycut which is 33% paycut. This is on top of the rising home prices.

http://www.fedprimerate.com/new_home...ce_history.htm national average

Sept 2009 Median $216k , Average $290k interest rate is 5.06% Payments are $1167 median , $1567 average
July 2021 $390k , Average $446k interest rate is 2.87% $1617 median , $1867 average

So it's gone up. 38.5% for median home payments have gone up , 19.1% it's gone up for the average

But instead you have a $36k inflation paycut or $10k real paycut.

So how are people to even be the same?

Fishing I agree that you should be a welder for $85k. But is it not publicized enough? Is it that high because people don't want to do it? Why not?

As such as life, everything is constantly moving in directions you don't expect but should prepare for. The purchasing power of a pharmacist got reduced thanks to technology, but AI engineer salary has skyrocketed when it was not even much of a field 12 years ago. I know I picked an old aging field and can't do anything about it. However I can save/invest so just incase my job disappeared I'll be okay. There's no use crying about it as this is how the market work. I am not entitled to a high salary if one day SIRI can take over.

They say you have to constantly be above the API in order to be successful vs being below the API. Most people are below the API, including myself. So the best I can do is control what can be controlled(which is the cash flow coming in).

So the problem is this right now. Things are moving faster than people are comfortable with and this is leaving people behind. So it's no time to dilly dally around hoping answers will be spoon fed to you, or you hoping that some governmental intervention can stifle progress so you can be saved (looking at you all the car dealers/car part makers/gas stations/pep boys/oil producers/etc etc). This information age is the great equalizer. Just like interest being the 8th wonder of the world, those who use it can earn from it, those who don't will pay dearly for it.

[Fishindude77]

Fishing I agree that you should be a welder for $85k. But is it not publicized enough? Is it that high because people don't want to do it? Why not?

Requires getting up early and going to work every day.
Requires being drug free.
Requires sticking with and learning a skill.
Requires getting dirty and sweaty at times.
Requires a little physical effort.
Requires buying tools.
Requires a commute to a jobsite.